Dumb and Dumber Tax Hikes

One of the dumbest things a country can do in a recession is raise
taxes. Yet, after pronouncing the end of austerity, Italy's "grand
coalition" government, led by Enrico Letta, is going to hike the VAT.

Why? It seems they need to hike the VAT to pay for a decrease in property taxes.

Recall that Silvio Berlusconi was only willing to take part in Letta's
grand coalition on condition property tax hikes were rolled back. Letta
agreed to do that, but now Letta says Italy needs revenue hikes to make
up for it.

Il Corriere della Sera and other Italian papers are leading with the
news that finance minister Fabrizio Saccomanni and another cabinet
ministers said yesterday that Italy cannot simultaneously afford to cut
the IMU housing tax and not implement an envisaged rise in VAT, and
would thus opt to raise VAT.

In its coverage, La Repubblica writes that Saccomanni is now becoming a
controversial within the coalition, as Silvio Berlusconi appears to
appear chosen him as a target for his verbal attacks. The VAT increase
is threatening to drive a gulf between the two largest parties, the PD
and Berlusconi’s PdL.

I agree with the following comments from Eurointelligence: "A
rise in VAT is probably the worst thing that can happen right now ...
Italy will miss the 2.9% deficit target, since the economy is likely to
go into another convulsion once VAT is raised."

Two more MPs have left the Movimento 5 Stelle parliamentary group, the
Huffington Post Italia reports, bring the total number to five.
Lawmakers Alessandro Furnari and Giuliana Labriola have quit M5S after
internal fights, accusing Grillo of being a dictator and the party for
failing to make substantive proposals. In an interview, Furnari said the
M5S was dying due the Grillo’ mix of inexperience, rawness and vulgar
display of ideas without content.

Grillo, meanwhile, has gone again on a verbal rampage. As reported by Il
Corriere della Sera, he called the current Italian Parliament an "empty
can of tuna." He said it was illegitimate because it was elected under
an electoral law that he called is unconstitutional.

Reader "AC", from Italy, predicted the rise of Beppe Grillo well in
advance of any mainstream media coverage, also told me "Grillo has
peaked" shortly after the national election. She called that one
correctly as well.